by Rob Bertman, CFA®, CFP® in Budgeting, Spending

August 21, 2021

How to Stop Spending Money WITHOUT a Strict Budget

Look, I’ll be honest. We’ve all made the mistake. I’ve seen it hundreds of times.

We think a strict budget will help us stop spending money, like it’s some magical solution that will help us stop overspending.

But it’s not that easy.

It’s not easy, because spending money isn’t actually about the money. It’s about getting something we want and the spending habits we’ve gotten ourselves into.

The exchange of money is often an afterthought.

Need some food? Order DoorDash. Need anything and everything? Amazon. See something you want at Target? It’s just one more thing.

One other thing.

The more rigid our budget, the less likely we are to stick to it.

Once we go over budget by just $1, the whole thing blows up spectacularly. We’ve already failed, right? Might as well just go all out until the calendar changes…if we recommit at all.

But it doesn’t have to be that way. Living below your means can be easier than you think.

Here are my top 10 tips to stop spending money without having a strict budget. Also, check out our family budgeting tool.

Table of Contents

Set Short Term Financial Goals

When you go out to dinner, do you think to yourself, “If I order another drink tonight for $10, it’s going to mess up my retirement!”

Probably not.

When things seem far off in the future, they don’t impact our daily habits. How does spending extra money today get in the way of my financial independence in 30 years anyway?

That’s where setting short-term goals comes in.

We need a tangible trade-off when we’re learning how to stop spending money.

For example, if you’re trying to pay down an extra $300 of credit card debt over the next 30 days, that’s $10 a day.

Spend the extra $10 or reach my $10 savings goal for the day? A decision that previously had no context now becomes a binary choice that tangibly affects your financial future.

Key Takeaway: Setting short term financial goals gives meaning to your daily actions.

Action Step: Break down long term goals into bite-sized chunks so your daily decisions have meaning.

If you want more help here, read my Top 10 Short Term Financial Goals here.

Count your transactions

This is one of my favorite hacks. It’s really easy.

Overspending can come in two different varieties:

High fixed expenses – rent, mortgage, car payments
Frequent small transactions – “Death by 1,000 cuts”

Yes, big decisions like buying a house matter, but the little ones add up too.

The more often you spend, the more likely you are to buy things you don’t need.

Getting the pastry with your morning coffee, grabbing those impulse buys at Target or Walmart, leaving the grocery store with more food than was on your list.

Spending less often will automatically help you stop spending on wasteful things.

Try this: Start counting on your fingers how many times you pay for something each day.

That includes morning coffee, dining out, Amazon purchases, buying things for your kids, ordering on Etsy, and clothes shopping.

Another way to do it is by counting the line items on your credit card bill or bank account statement. If it’s more than 150 per month, that’s a lot. If it’s less than 100 and you have a family, that’s pretty good.

See if you can keep your transactions to 3-4 per day. If it gets into the 5, 6, 7+ range, your overspending is a result of how often you’re spending.

Key Takeaway: The little things add up! The more often you spend, the more chances you have to overspend. Stop spending money on unnecessary things by spending money less often.

Action Step: Count your transactions each day over the next week. If you find yourself spending more than 5 times per day, see if you can get it down to 3 or 4.

Track Your Spending

This is the #1 habit for those who are wondering how to stop spending money.

But tracking your spending is like stepping on the scale. No one really wants to do it unless they know they’ve been doing well with their diet.

When I do the first spending review with a client, I often hear, “I’ve been dreading this!”

But, they almost always have a sense of relief after we’re done, because they know their overspending habits.

Not only does tracking your spending help you know your starting point, it’s also a critical step BEFORE making a budget.

I had a client who set their budget to $800 a month on food. They thought they could do it because they were spending $1,000 a month right now. Sounds attainable right?

But there was a problem.

They were spending way more than they thought. After a spending review, it turned out they were averaging $1,800 a month for the last 3 months!

Going from $1,800 to $800 would require some serious lifestyle change and would be doomed to fail.

You may even be spending more than you earn without realizing it.

Another couple I worked with was taking home about $8,000 per month and thought they were spending $7,000 per month.

But they didn’t quite understand why they didn’t have enough money to pay off their credit cards at the end of the month. In fact, they had growing credit card balances.

After a spending review, we saw that they were actually spending almost $10,000 per month, $3,000 a month more than they thought. After identifying the problem, they knew how to fix it.

Key Takeaway: Tracking spending is the #1 financial habit to implement. Even if you’re dreading it, you’ll feel empowered once you do it.

Action Step: Sign up for a budgeting app and track your spending weekly.

Create a budget for the problem areas only

Have you ever made a to-do list and put “brush teeth” or “take a shower” on it so you’d remember?

Not likely. Those are already habits…hopefully 🙂

But that’s what we do when we create budget categories.

We track everything, and all that information clouds us from where our focus should be.

You probably have 1-3 problem budget categories which become clear after tracking spending. Focus on those areas alone to reduce spending and save money.

Key Takeaway: Too many budget categories may actually be counterproductive. Set a spending limit only where you commit to spending less money.

Action Step: Pick two budget categories where you overspend. Review how much you’ve spent over the last 3 months and come up with a realistic budget that you can meet.

Keep, Cut Back, Eliminate – The Family Budget Expert way to spend less money

Imagine if you could keep spending money on the things you enjoy and stop spending money on the things you don’t care about.

That’s where Keep, Cut Back, Eliminate comes in.

Instead of looking to where you want to spend less, first start with the things that you want to keep spending money on 100%. Those are your keeps.

Next, think about the things you enjoy doing but you could cut your spending without feeling like you’re sacrificing your lifestyle. Those are your cut backs.

Now, take a look at spending that provides absolutely no value to your life and may even be counterproductive. Those are 100% eliminates.

In the end, you’ll have the money to spend on what you want and have more money left over at the end of the month.

P.S. This works great even if money and relationships haven’t mixed well in the past.

Key Takeaway: You don’t have to stop spending money on the things that are important to you if you stop spending on things you don’t care about.

Action Step: Make a list of the things you want to KEEP, where you’re ok to CUT BACK, and the things you can downright ELIMINATE.

Download your free guide here: 5 Steps to Cut Spending

Remove your spending triggers

When I was a kid, infomercials always got me. They showed me a problem I never knew I even had and got me to feel like I needed their solution right now!

Now, that kind of thing comes to us non-stop and companies have gotten really good at their targeting.

Selling on social media is extremely effective. If you’ve ever experimented with Facebook Ads, you know that you can reach your ideal audience down to their detailed interests quite easily.

Email campaigns from retailers can be based upon your purchase history so they know what you like.

YouTube ads and your web browser are based upon your search history. Marketers can even have their ads follow you if you from one platform to another.

And oh…Amazon…

Spending is easier than ever too. Companies are on a mission to have “frictionless payments” like one-click pay, tap-to-pay, credit card information saved so you don’t even have to enter it, etc.

Heck, it’s so easy to buy things now that even a baby could do it (and they have).

These spending triggers are today’s infomercials. We end up buying things we don’t need and rarely or never use, leaving us with less money to save, invest or pay off debt.

Here are ways to remove spending triggers:

Unsubscribe to marketing messages.
Put an ad blocker on your browser.
Stop following people/organizations where you spend money on things you feel are a waste.
Remove payment information from sites where you typically overspend.

Key Takeaway: Targeted ads follow you everywhere and frictionless payments have made it super easy to spend money. The best way to stop spending money is to remove those triggers.

Action Step: Take one action. Unsubscribe from an email, install an ad blocker, pick one person to stop following, or unsave your payment info.

Perspective change: Cutting your expenses is like getting a raise.

Some try to outearn their spending problems. “If I could just make more money,” they think.

But did you know you can give yourself a raise by cutting your spending?

Here’s how to calculate your raise:

Come up with how much spending you’d like to cut each month.
That’s after tax money, so let’s assume 33% taken out for state and federal taxes + FICA (payroll taxes).
Under that assumption, you’d take home $1.00 for every $1.50 in salary, so multiply the spending cuts by 1.5 to calculate your “raise” in salary or bonus.
Multiply it by 12 to get the annual figure.

Let’s say your household income is $120,000 and your goal is to stop spending $1,000 per month.

That’s about $1,500 in extra gross salary you’d have to make ($1,000 x 1.5) per month or $18,000 per year ($1,500 x 12).

Congratulations, you got a 15% raise! ($18,000/$120,000)

Key Takeaway: Cutting your spending is just like getting a raise.

Action Step: Calculate your raise using the equation above.

Find an Accountability Partner

The American Society of Training and Development (cited on Mui Tsun’s website), says that having a specific accountability appointment with a partner dramatically increases the likelihood of reaching your goals.

Find someone you trust and will be honest with you to hold you accountable. This is not someone who always tells you yes.

This can be a spouse, a friend who is interested in personal growth, or a mentor.

Key Takeaway: Accountability partners dramatically improve your chances of success in reaching your goals.

Action Step: Think of a person who will give it to you straight. Share your goal with them and set up a regular call or text check-in to make sure you stay on track.

Forget perfection. Treat it like an experiment.

Don’t be so hard on yourself!

It’s an experiment to stop spending money. Think of it like online clothes shopping.

Something may look great on the site, but it’s not quite right when you try it on. So, maybe you try another size, another cut, or another store. You keep trying.

Making a budget that sticks is an experiment. We’re not setting up the perfect system. We’re trying something on to see how it fits.

Be an observer and problem-solver if it doesn’t fit.

Make the tweaks you need for it to work better for you.

Key Takeaway: Understand that your first go might not work and that’s ok. It’s an experiment. Progress is better than inaction.

Action Step: Try out an action steps above for 30 days. Act like you’re heading up a research project with you as the subject. Objectively evaluate what works, what doesn’t, and improve it.

Remember, your kids are watching. Involve them.

Just about every client I work with (and my personal experience) points to their upbringing as the primary influence on their money habits.

What example are you setting for your kids?

Do you have Amazon packages arriving every day? Do you frequently impulse buy?

Do you fight about money within earshot of your kids or make comments about your spouse’s spending habits around them? When they ask for something, do you just get it for them without it being a special occasion?

Look, none of us are perfect, but this can be a golden opportunity.

Studies show that one of the best ways to impact your children is to show them that even you make mistakes then involve them in your learning process.

Create the opportunity to involve them in some of your financial decisions.

Key Takeaway: Your children are picking up on the explicit and subtle ways you handle and talk about money.

Action Step: Next time you shop with your kids, tell them how much you plan to spend. Ask for their help making choices to stay within your budget.